StayPositive Electric Company is being considered for acquisition by Negative Circuits Electric. Negative Circuits expects the combination to increase its cash flows by $100,000 for each of the next 5 years and by $125,000 for each of the following 5 years. StayPositive Electric has relatively high financial leverage; Negative Circuits expects its cost of capital to be 12% for the first 5 years and estimates that it will increase to 16% for the following 5 years if the merger is undertaken. The cash price of StayPositive Electric is $325,000. Create and submit a spreadsheet to answer the following questions.

a. Determine the present value of the expected future cash inflows over the next 10 years.

b. Calculate the net present value (NPV) for the StayPositive Electric acquisition.

c. All else being equal, would you recommend the acquisition of StayPositive Electric by Negative Circuits Electric? Explain.